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Organizational health: The ultimate competitive advantage

September 28, 2011 • STRATEGY & MANAGEMENT, SUSTAINABILITY & ETHICS, Talent Management, Team Managment

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By Scott Keller and Colin Price

To sustain high performance, organizations must build the capacity to learn and keep changing over time.

The case for health starts with an understanding of how it relates to performance. Performance is what an enterprise delivers to stakeholders in financial and operational terms. It is evaluated through such measures as net operating profit, return on capital employed, total returns to shareholders, net operating costs, and stock turns. Health is the ability of an organization to align, execute, and renew itself faster than the competition to sustain exceptional performance over time. It comprises core organizational skills and capabilities, such as leadership, coordination, or external orientation,1 that traditional metrics don’t capture.

More than a decade of research and even more of experience have led us to strongly believe that health propels performance—and that, in fact, at least 50 percent of any organization’s long-term success is driven by its health.2

 

Statistical evidence

We have developed a survey to measure organizational health and administered it to over 600,000 employees at more than 500 organizations across the globe. The survey’s immediate purpose has been helping organizations to measure their health and then to improve in areas of weakness.



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